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For LMS, read devolved funding;Briefing;Document of the week

The Government wants to replace local management of schools with a much clearer system, reports Karen Thornton .

The infamous funding fog may soon be clearing from the muddied waters of schools' delegated budgets. The Government is hoping its long-awaited consultation paper on changing local management of schools (LMS) will make it easier for teachers, parents and other non-accountants to work out just where the money is going.

Getting the funding of schools right is seen as key to the Government's primary aim of raising standards. Greater transparency in the way money is shared out is a core part of the deal - a means of holding both schools and education authorities to account for how they deliver on the standards agenda.

"While local management of schools has been a success, the current arrangements for delegating budgets have a number of problems," said the school standards minister, Stephen Byers.

"They lack transparency, they limit value for money by putting little pressure on education authorities to spend the non-delegated elements well, and they blur accountability because it is not always clear who is responsible for which spending."

The proposed solution is devolved funding, under which schools will receive 100 per cent delegated funding for a new range of responsibilities, now mostly borne by education authorities.

These include school meals, school library services, central support services (for example, payroll), ancillary services (for example, cleaning), building repairs and maintenance, minor capital works, and curriculum, advisory and training services.

There are exceptions. Nationalisation is the solution offered to the politically sensitive issue of protecting school music services, as trailed by the Education and Employment Secretary, David Blunkett, in The TES on May 22.

The standards fund would pay for a minimum level of local provision, guaranteed for at least three years, in return for a top-slice of education authority budgets. A similar solution could be applied to drama, dance and arts programmes, sports schemes and outdoor education centres.

Services which need a high level of buy-back to be sustainable - such as the school library service - could be subject to "significant majority voting". If a minimum 80 per cent of schools agreed a service should remain with the education authority, that decision would be binding on the minority.

Otherwise, education authorities will be left with a largely regulatory and enabling role - although they will be expected to offer partial and full "buy-back" to those schools that don't want the additional responsibilities.

Only non-school education expenditure (for example, student awards and adult education) plus on-going school-related commitments (such as early retirement and redundancy costs) will be excluded from what will be called the local schools budget (LSB).

Within the LSB, authorities would be able to retain funding for only four core areas: l Strategic management, including spending on the chief education officer and departmental staff, corporate planning, audit, and statutory duties; * Access - school places, admissions, transport; * LEA support for school improvement, as set out in an authority's education development plan; * Spending on special educational needs, including statementing.

All the rest of the cash - called the individual schools budget (ISB) - will have to be delegated fully to schools, according to locally-agreed schemes.

There will be no hiding place for central management costs tied up with running committees and the education department, and buying other council services such as legal advice. The Government is insisting all these should be explicitly stated in the LSB.

Authorities will still be held accountable for the money delegated to schools, but are warned against imposing excessive financial reporting requirements and controls on schools.

There are also warnings against education development plans which require "excessive funding" to be retained by authorities. The threat of capping is left hanging in the air, and all authorities' spending will be published in performance tables.

The tone of the document will confirm the fears of some education committee chairmen that the Government has been influenced by the grant-maintained model. Certainly school standards minister Stephen Byers believes GM schools will be able to maintain broadly the level of delegation they are used to, while education authorities will have much less flexibility in determining local schemes, and in how they account for their education expenditure.

But Graham Lane, chairman of the Local Government Association's education committee, was bullish about the consultation paper.

He claims the proposals constitute a different model to the GM sector, and will leave GM heads "jumping up and down" about being held to account for their expenditure.

He welcomed confirmation that education authorities will get the money they need for strategic planning and the standards-raising role they have been set by the Government.

Moreover, the crucial section on how the ISB will be distributed to schools is far less prescriptive than the rest of the document - leaving some degree of local flexibility.

Pupil numbers will remain the major factor in how the money is divided up between institutions. But the paper acknowledges that some of the new services to be delegated - such as buildings repairs and maintenance - are not numbers-driven.

It proposes allowing education authorities the "maximum scope" for allocating money in a way that best meets the needs of their area, and offers a "menu" of possible allocation factors - including social deprivation indicators, sizes of school grounds and buildings, additional facilities (such as swimming pools), split-site allowances, payments based on rateable values, and sixth- form funding.

The LGA is still calling for the proposals to be delayed to April 2000, or at least phased in. It says there is too little time for full local consultations and for hammering out the details involved in transferring millions of pounds to schools.

Graham Lane added: "A delay would allow schools to have a real look at the services and decide if they want to send them back, whereas the odds are if you do it in April 1999, they will send them all back."

Nokt-graph Replacing Local Management of Schools The Government proposes to replace LMS with a new system, devolved funding, based on a 100 per cent delegation model.

Local education authorities would retain funding centrally for:

* Strategic management.

* Access (school places, admissions, transport).

* School improvement (as per education development plans).

* Special educational needs provision.

Schools could take on allsomenone of the following:

* Building repairs and maintenance.

* Minor capital works.

* School meals.

* Central support services (such as payroll).

* Ancillary services (including cleaning and catering).

* Curriculum, advisory and training services.

* School library services.

Exceptions and special cases include:

* Music services - national support via the standards fund.

* "Significant majority voting" - school library services, for example, could be retained by education authorities if 80 per cent of schools agree.

* School insurance - national scheme being considered.

The document is available on the DFEE website ( or from DFEE Publications Centre, PO Box 5050, Sudbury, Suffolk CO10 6ZQ, telephone 0845 602 2260, fax 0845 603 3360, Consultations on the proposals close on July 31. Comments should be sent to Julian Seaborne, 2D3, School and LEA Funding Division, DFEE, Sanctuary Buildings, Great Smith Street, Westminster SW1P 3BT or e-mailed to:

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